Renewables accounted for almost two-thirds of net new power capacity around the world in 2016, boosted by a strong solar market, according to the International Energy Agency (IEA).
The study states that last year, new solar PV capacity around the world grew by 50%, reaching over 74 GW, with China accounting for almost half of this expansion. For the first time, solar PV additions rose faster than any other fuel, surpassing the net growth in coal.
Helping the record-setting popularity of renewable energy sources were prices as low as 3 cents per kWh. Increasingly, power purchase agreements (PPAs) for solar PV and wind power are equal to or lower than generation cost of newly built gas and coal power plants.
IEA predicts renewable electricity capacity to expand by over 920 GW, an increase of 43%, by 2022. The report states:
Solar PV is entering a new era. For the next five years, solar PV represents the largest annual capacity additions for renewables, well above wind and hydro. This marks a turning point and underpins our more optimistic solar PV forecast which is revised up by over one-third compared to last year’s report. This revision is driven by continuous technology cost reductions and unprecedented market dynamics in China as a consequence of policy changes.
IEA projects that wind and solar together will represent more than 80% of global renewable capacity growth in the next five years. By 2022, Denmark is expected to be the world leader, with 70% of its electricity generation coming from variable renewables.
The study states that renewable policies in many countries are moving from government-set tariffs to competitive auctions with long-term power purchase agreements (PPAs) for utility-scale projects. Increased competition has allowed reducing remuneration levels for solar PV and wind projects by 30-40% in just two years in some key countries such as India, Germany and Turkey.
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